Adobe jumps on report; NovaStar, E-Trade hit hard

SAN FRANCISCO (MarketWatch) -- Adobe Systems shares jumped 4% in extended trading Monday after the software maker said its third-quarter profit more than doubled thanks to strong demand for its Creative Suite 3 and Acrobat products.

Novastar Financial and E-Trade Financial weren't nearly as fortunate.

The Nasdaq-100 After Hours Indicator, which tracks the evening action of the tech-heavy indexes leading stocks, dipped fractionally to 1,982 points.

Earlier, major market indexes turned south as skittish investors girded for the Federal Reserve's decision on interest rates due Tuesday. See full story.

The Dow Jones Industrial Average
INDU, +0.36%
lost 39 points to close at 13,403 and the Nasdaq Composite Index
COMP, -0.22%
shed 21 points to 2,582.

Adobe rallies on profit double

Adobe
ADBE, -0.44%
posted a profit of $205.2 million, or 34 cents a share, up from $94.4 million, or 16 cents a share, a year earlier.

Excluding items, profit would have come in at $269.4 million, or 45 cents a share. Revenue grew 41% to $851.7 million from $602.2 million a year ago.

Analysts polled by Thomson Financial are looking for a profit, on average, of 41 cents a share on revenue of $789.3 million. The stock, up about 15% in the past year, drifted less than 1% lower to close at $43.06. Shares rebounded to add $1.61 to $44.67 in late trades. See full story.

Adobe was second in terms of evening volume to fellow software maker Microsoft Corp.
MSFT, -1.33%
which saw its shares dip slightly.

NovaStar drops; E-Trade warns

NovaStar Financial
NFI, +0.73%
took the biggest blow in late trades, with its stock off almost 20% at $6.70. The company said it will not proceed with plans to declare a dividend, causing its status as a real estate investment trust to be terminated, retroactive to Jan. 1, 2006.

NovaStar said that, because of a substantial decline in its market capitalization during recent months, combined with its inability to consummate a planned rights offering and demands on the company's liquidity, it cannot create enough value through the issuance of preferred securities to satisfy the Real Estate Investment Trust distribution requirement.

And sellers also flocked to E-Trade Financial Corp.
ETFC, -0.48%
which fell 7.6% to $13.13 after the company said intends to sell or restructure non-businesses to focus on retail growth. The New York-based electronic brokerage firm cut its 2007 earnings range to $1.05 to $1.15 a share from $1.53 to $1.67 a share on the changes.

E-Trade said it will exit its wholesale mortgage operations, streamline its direct mortgage lending business and restructure its institutional sales trading unit. The company expects exit charges, which will primarily be recorded during the fourth quarter, to be about $32 million.

Separately, Dell Inc.
DELL
said that it has received a letter saying the company isn't in compliance with Nasdaq listing requirements. Dell said it expected to receive the Nasdaq notification that refers to delays in the company's filing of its quarterly reports for two periods in 2006 and one in 2007. Dell said it expects to file all of its past reports before or on the Nasdaq deadline of Nov. 12.

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